Question

you expect to sell 500 cell phones a month, which have a marginal cost of $50. if your fixed costs are $7,000 per month, and $5,000 of those fixed costs are avoidable, what is the break-even price? you expect to sell 500 cell phones a month, which have a marginal cost of $50. if your fixed costs are $7,000 per month, and $5,000 of those fixed costs are avoidable, what is the break-even price? $50 $60 $10 $64 $100

Answer 1

The break-even price can be calculated by adding the total fixed costs, avoidable fixed costs, and total marginal costs, and dividing that sum by the expected number of unit sales. The break-even price in this case is $74.

Step-by-step explanation:

The break-even price can be calculated by adding the total fixed costs, the avoidable fixed costs, and the total marginal costs, and then dividing that sum by the expected number of unit sales. In this case, the total fixed costs are $7,000, the avoidable fixed costs are $5,000, and the total marginal costs for 500 units are 500 x $50 = $25,000. So, the break-even price would be:

Break-even price = (Total fixed costs + Avoidable fixed costs + Total marginal costs) / Expected number of unit sales

= ($7,000 + $5,000 + $25,000) / 500

= $37,000 / 500

= $74

Therefore, the break-even price is $74.